MeetMe's (MEET) CEO Geoff Cook on Q4 2016 Results - Earnings Call Transcript

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MeetMe Inc. (NASDAQ:MEET)

Q4 2016 Earnings Conference Call

March 6, 2017 4:30 PM ET

Executives

Todd Kehrli – MKR Group

Geoff Cook – Chief Executive Officer

David Clark – Chief Financial Officer

Analysts

Darren Aftahi – Roth

Andrew Boone – JMP Securities

Nick Altmann – Northland Capital Markets.

Blake Harper – Loop Capital

Darren Aftahi – Roth

Jeff Osher – Harvest Capital

Operator

Good day everyone and welcome to the MeetMe Fourth Quarter and Fiscal Year 2016 Financial Results Conference Call. Today's conference is being recorded and at this time, I would like to turn the conference over to Mr. Todd Kehrli, MKR Group. Please go ahead, sir.

Todd Kehrli

Thank you, operator and good afternoon everyone. Welcome to MeetMe's 2016 fourth quarter and year-end earnings conference call. On the call this afternoon are MeetMe's Chief Executive Officer, Geoff Cook; and Chief Financial Officer, David Clark.

Before we begin, I’d like to remind everyone that during this conference call, management will make certain forward-looking statements, which convey management's expectations, beliefs, plans and objectives regarding future financial performance. Forward-looking statements are generally preceded by words such as believe, plan, intend, expect, anticipate or similar expressions.

Forward-looking statements are protected by the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ material respects, including those relating to our plans regarding new products and mobile monetization. Actual results could differ materially from those described in this conference call and presentation.

Information on various factors that could affect MeetMe's result is detailed in the reports filed with the Securities and Exchange Commission. MeetMe is making these statements as of March 6, 2017, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call.

In addition to GAAP results, we will discuss certain non-GAAP financial measures on this conference call, such as adjusted EBITDA. Our earnings press release can be found on the news release link on the Investor Relations page of the Company's website at www.meetmecorp.com. The tables included with the earnings press release including the reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. A replay of this conference call will be available on the Investor Relations section of the MeetMe corporate site at again at www.meetmecorp.com.

With that said, I would now like to turn the call over to our CEO, Geoff Cook.

Geoff Cook

Thanks everyone for joining us today. We are pleased to report strong financial results that include records for revenue, adjusted EBITDA and net income for both the fourth quarter and full-year 2016. We believe these record results reflect the increasing value of our audience to mobile advertisers as well as the growth of our mobile users during the year.

Looking at our financial highlights for the full-year, our mobile revenue grew 56% to a record $70.7 million, while total revenue increased 34% to a record $76.1 million. In Q4, we achieved record mobile revenue of $27.8 million up 62% year-over-year and record total revenue of $29.2 million, up 47% year-over-year. We grew adjusted EBITDA 45% in 2016 to a record $29.3 million or a 39% adjusted EBITDA margin.

And in Q4, we achieved record profitability with $12.8 million in adjusted EBITDA and $12.4 million of non-GAAP net income. Our recent acquisition Skout performed well for us in the fourth quarter. We feel we are pacing at or above our adjusted EBITDA objective of $7.5 million in year one following the closing. And we saw both year-over-year and sequential revenue growth from Skout in Q4.

Traffic and engagement grew nicely in 2016 as well. For the full-year our mobile daily active users increased 84% to 2.03 million on average and our total mobile monthly active users increased 103% to $8.2 million, largely because of the Skout acquisition.

In the fourth quarter MeetMe DAU was in line with Q3 and up 13% year-over-year, while Skout DAU declined by approximately 10% sequentially. Largely as a result of Indonesia blocking our Skout app among a number of other industry apps, Indonesia was Skout’s second largest country. The block was not material to revenue and Indonesia has now unblocked Skout as of a couple of weeks ago.

We believe Skout DAU may also have been impacted by increasing the ad load we added in order to be more in line with MeetMe’s ad load. During the fourth quarter, we executed effectively against our strategy to innovate, acquire and build the largest mobile portfolio for meeting new people. We have and plan to continue to pursue a portfolio strategy because our members use a portfolio of apps.

In a recent study of 25,000 users we’ve found that our users use 3.4 dating apps on average and that number is even higher, if you just look at U.S. users. A portfolio enabled certain network effects, scale is important to our business with more people there's more people to meet, more people to chat and more chances to spark a human connection. We believe people want to find the most relevant people for them in a portfolio approach helps to provide the scale to deliver on that promise.

We believe there are two critical ways to continue to grow our audience in 2017 and beyond, the first is to innovate. The second is to acquire strategic properties, we have watched Momo, a Chinese competitor tripled their revenue and reinvigorate their brand through the launch of a new video product.

We have watched another Chinese company Cheetah Mobile, find success in the United States with a Live.me an app that according to App Annie frequently gets more downloads per day than Tinder.

You have heard me talk about MeetMe many times as the neighborhood bar, the good bars tend to have live entertainment, a stage, a band, live video we believe will be MeetMe’s entertainment. On the stage will be the users themselves, this social entertainment model is powerful. We believe chat will keep users coming back and video will keep them here longer, a winning combination.

MeetMe intends to be the first meeting dating company of size to add live video on its mobile apps. We plan to launch it in the coming weeks to beta users. We intend to complete the rollout in Q2 and to begin to monetize it and launch it on Skout in Q3. We also intend to continue to identify and seek to acquire strategic properties. As I said before, Skout is on track to deliver $7.5 million of adjusted EBITDA in year one.

It had roughly $26 million in LTM revenue when we bought it in October, but we see more opportunity than that. Currently we are working on a feature that we believe could dramatically increase user choice. A feature that we believe enables us to leverage our acquisition of Skout. Soon Skout users will appear in MeetMe and MeetMe users in Skout. And we will allow seamless chat across the networks, increasing the overall choice of users we believe by approximately 70%. We believe this project, which is currently rolling out to all users has the potential to increase engagement and demonstrate the network effects that we believe are inherent in our portfolio model.

Adding Skout to MeetMe was the first step in our effort to build and acquire a leading portfolio of mobile apps. On that note today, I am thrilled to announce our second strategic acquisition an agreement to acquire If(we), a social and mobile technology company based in San Francisco with two leading mobile brands for meeting and chatting with new people, Tagged and hi5.

If(we)’s community spans over 100 countries and their apps are available in 15 different languages, founded in 2004, If(we)’s apps have made tremendous progress in a very competitive market. Their mobile apps are similar in size to our existing apps and their mobile web and desktop platforms continue to support a loyal following.

The Company has a diversified revenue model, if we had total revenue of approximately $44 million in 2016 and EBITDA of approximately $9 million, approximately $12.9 million or 29% of 2016 revenue was from mobile apps. With the balance coming from desktop and mobile web platforms. They have product diversification as well.

In Q4 2016, 41% of revenue came from advertising, 49% from virtual currency and 10% from subscriptions and other products. While we expect this diversification to continue we anticipate advertising to garner a larger share of total revenue going forward given our experience and strength in mobile advertising.

We believe the mobile app platforms represent a significant opportunity and they were a key reason we pursued If(we). Their mobile app business is experiencing accelerating revenue growth, which we expect to continue in 2017. Total mobile app revenue grew 56% in Q4 2016 versus Q4 2015 to approximately $4.3 million. In particular mobile app advertising revenue grew 93% in Q4 2016 versus Q4 2015 to approximately $2.6 million.

We believe there are opportunities to accelerate that growth in 2017, as we roll-out our best practices in advertising and engagement. As an example, MeetMe’s U.S. mobile app advertising monthly average ARPU was $2.41 in Q4 2016 by comparison If(we)’s Q4 2016 U.S. mobile app add ARPU was $0.79. We believe we should begin to see conversions of these key metrics over time. We believe the opportunity to drive conversions of these key metrics is significant.

For example holding DAU the same if we were to increase If(we)’s mobile app ad CPMs to within 60% of MeetMe’s values and implement similar ad load as MeetMe that would yield an incremental expected $12 million to $20 million in mobile advertising revenue. We believe that If(we) apps are similar in size to Skout’s mobile DAU but with a larger share of U.S. audience, which we believe should make them a larger mobile advertising business over time.

If(we)’s audience is significant, using today's numbers the acquisition brings an additional $2.3 million mobile app MAU and 5.4 million total MAU including mobile web and desktop. It also contributes $765,000 DAU on mobile apps, and 1.5 million DAU overall.

Finally, we believe the acquisition will add 10.4 million mobile app chats per day and 18,000 new registered mobile app users on average each day. Unlike Skout, If(we)’s user base skews more to the United States where monetization is significantly higher.

In the fourth quarter of 2016, 308,000 of If(we)’s DAU originated in the U.S. compared to 156,000 for Skout and 635,000 for MeetMe. Combined we believe our portfolio will include nearly 1.1 million U.S. mobile app DAU.

With our expanded portfolio of brands, we intend to connect more than 10 million mobile app monthly active users around the world who are sending 66 million chats daily and are being joined by more than 138,000 mobile app and new users every single day. Based on our proven ability to drive profitability and our understanding of their engagement and revenue model, we expect If(we) to contribute at least $9 million in adjusted EBITDA in the first 12 months following our expected second quarter closing and we expect it to be accretive to earnings in that same period.

In addition to these preliminary expectations, we anticipate we will be able to drive results further by leveraging identified synergies. These synergies include creating value through cross-promotion, Tagged and hi5 provide another sizable pool of users that we can introduce to our existing network to increase the number of possible connections. We are already evaluating cross-promotion opportunities with If(we) apps.

We have found negligible overlap among monthly active users of If(we) apps. And our current portfolio of apps and believe any cross-promotion will be additive and effective. Further by standardizing the backend for certain products like recommendation engine, chat and Discuss among all of our portfolio apps, we believe we can significantly lower their technology costs over time.

Finally, we plan to combine the Skout and If(we) San Francisco offices, which we expect will result in both productivity gains and financial cost savings. To support these moves we have made a change to engineering leadership.

We are pleased to announce that Skout’s Co-Founder and CTO, Niklas Lindstrom has joined MeetMe as Chief Technology Officer and that Rich Friedman himself a former CTO of MeetMe has rejoined the Company as SVP Engineering to be based in our East Coast headquarters. We believe these two proven technology leaders will continue to build out a world-class collaborative engineering team.

I am also pleased to welcome Jim Bugden as SVP Corporate Development and General Manager of San Francisco. Jim served as CFO of myYearbook for several years and knows the business well. I also look forward to welcoming Louis Willacy of If(we) as Head of HR for MeetMe effective at the closing of the acquisition. I have known him for a number of years and look forward to his contributions on the management team. Jim, Louis and Nik will all be based in San Francisco.

We believe the If(we) acquisition to deliver strong shareholder value. Based on the unaudited results for If(we) we are paying approximately 1.4 times trailing revenue versus the 2.1 times we paid for Skout. The forward adjusted EBITDA multiple for If(we) is approximately 6.7 versus 7.3 for Skout. Traffic multiples are also favorable relative to Skout we paid $68 per DAU for Skout, for If(we) we are paying approximately $41 U.S. mobile app DAUs are even better at approximately $197 versus $520 for If(we) and Skout respectively.

Everyone in MeetMe extends a warm welcome to the talented team at If(we), I’ve known founders Greg Tseng and Johann Schleier-Smith for many years. They are truly pioneers in social networking. I have also worked closely with their CEO, Dash Gopinath throughout this process. They all share our vision of building the largest global service for meeting and chatting with new people and I look forward to bringing Tagged and hi5 into the MeetMe portfolio.

Before I turn the call over to David, let me say that 2016 was a phenomenal year for MeetMe. We delivered record financial results and our acquisition of Skout was a significant step in our ongoing efforts to innovate, acquire and build the largest mobile portfolio of brands for meeting and chatting with new people. Going forward, we remain committed to our vision and to further growing our revenue and increasing profitability. With the addition of If(we) to our portfolio, we believe we have created a clear pathway to $150 million in annualized revenue and adjusted EBITDA of $50 million for our combined Company.

I’m excited by the opportunity to work closely with If(we)’s talented team to accelerate growth and engagement across a portfolio of brands, which are aimed at meeting the universal need for human connection. And I am thrilled to have the opportunity to build products that users love and then make such a difference in the lives of so many.

With that, I'll now turn it over to David.

David Clark

Thanks. As Geoff noted, we achieved the highest quarterly total revenue in mobile revenue in Company history of the fourth quarter. This quarter was the first quarter following the closing of Skout so these results reflect the consolidation of Skout from October 3 until the end of the year. In the fourth quarter, our business was much larger and much more international than ever before driven primarily by the acquisition of Skout. As an example, in the fourth quarter of 2015 83% of our nearly $8 billion ad impressions came from the U.S.

In the fourth quarter of 2016, 46% of over total 18 billion ad impressions came from the U.S. U.S. ad impressions get the highest CPMs in the world while international impression especially in non-English speaking countries can see much lower CPMs by comparison. We did experience growth in U.S. CPMs, U.S. ARPU and also U.S. revenue in the fourth quarter on both the MeetMe and Skout apps demonstrating the continued strength and evidence of the value they provide to advertisers.

Total revenue in the fourth quarter was $29.2 million up 47% from $19.9 million a year ago and mobile app revenue increased 62% on a year-on-year basis. That went to $27.8 million for the quarter and the bulk of that advertising – attributable advertising. Web revenue was $350,000 on the quarter and that's down from $1.2 million a year ago and in-line with our expectations for our Web business.

Our mobile quarterly average revenue per user or ARPU including Skout was $3.36 in the fourth quarter compared to $4.22 a year ago. Mobile average revenue per daily active user or mobile ARPDAU was $0.149 in the fourth quarter compared to $0.169 a year ago. We believe the dramatic growth in international ad impressions fully accounts for the year-over-year decline in ARPU and ARPDAU. In fact U.S. ARPU and CPMs in the fourth quarter increased for both MeetMe and Skout versus the year ago.

From an operational perspective, we spent $5.4 million or 18% of revenue on marketing during the fourth quarter and we anticipate spending approximately 20% of revenues on marketing in the first quarter of 2017 and to continuing that level for the remainder of the year. We're spending at this level because the current strong mobile ARPUs we are seeing, and our eye toward continued international expansion.

We believe we have a strong formula to turn that level of marketing spend into strong returns for our business. For the quarter, we reported record adjusted EBITDA of $12.8 million or a 44% EBITDA margin which is up 42% compared to $9 million a year ago. Adjusted EBITDA for the fourth quarter adds back $1.8 million in depreciation and amortization, $1 million of stock-based compensation, $3,200 of interest expense, $829,000 in acquisition and restructuring costs and it subtracts a one-time $750,000 income tax benefit.

A reconciliation of GAAP and non-GAAP measures such as the adjusted EBITDA are included on our SEC filings and an appendix of the presentation now posted in the investors section of our corporate website meetmecorp.com. We generated free cash flow of $9.2 million in the quarter and we ended the quarter with no long-term debt and cash and cash equivalents of $21.9 million.

For the full year, we achieved record total revenue of $76.1 million, which was up 34% year-over-year. Mobile revenue was a record $70.7 million, an increase of 56% year-over-year. Web revenue for the year was $2 million and that’s down from nearly $6 million in 2015. For the year, we reported record adjusted EBITDA of $29.3 million which represents a 39% EBITDA margin and a 45% improvement year-over-year. The annual adjusted EBITDA adds back $4.1 million of depreciation and amortization, $3.6 million in stock-based compensation, $19,000 interest expense, $865,000 of a non-cash increase in warrant liability. $2.5 million in acquisition and restructuring costs and it subtracts a $33,000 gain on the cumulative effect of foreign currency exchange rate as well as a deferred income tax benefit of $27.9 million.

For the full year, we generated free cash flow of $24.9 million and received over $13.3 million from the exercise of options and warrants. With this cash and cash equivalent on hand we internally funded the $28.5 million cash portion of the total consideration for Skout, as well as $5 million in stock buybacks while still ending the year with a $2.6 million increase in our cash position.

Before moving on to guidance, I’d like to provide some detail around the definitive agreement we signed today to acquire If(we). The total consideration is $60 million in cash, we expect to fund the acquisition with MeetMe’s cash on hand, cash from operations and the balance of the transaction coming from other sources of financings available to a Company including a $30 million bank loan from JPMorgan Chase bank associated with this acquisition.

We currently have $28 million of cash and cash equivalents on our balance sheet as of this time. We preliminarily expect If(we) to contribute at least $9 million in adjusted EBITDA on the first 12 months following our expected second quarter close and we do expect it to be accretive to earnings in the first 12 months post-close. We also expect If(we)’s mobile revenue to continue to accelerate with total revenue increasing modestly in the first 12 months post-close. And we feel very good that with our mobile monetization expertise, we will be able to further accelerate If(we)’s mobile revenue going forward and we will provide consolidated guidance after the acquisition is closed.

We expect If(we)’s brands to remain separate standalone applications following close the acquisition. If(we)’s offices will remain in San Francisco and we've extended offers of employment to approximately 87 of their 100 employees. Likewise If(we)’s CEO, Dash Gopinath has agreed to assist in the transition for one year following the closing of the acquisition. The deal was unanimously approved by the Board of Directors of both companies and we expect it to close in the second quarter.

Moving on to guidance, for the year 2017, not including any If(we) contribution along the line of preliminary expectations, we expect total revenue to be in the range of $100 million to $105 million, which represents total revenue growth between 31% and 38% year-over-year. We expect adjusted EBITDA to be in the range of $35 million and $40 million and which would represent growth of 19% to 36% year-over-year. We anticipate being net income positive in all four quarters and with the anticipated CapEx that is only $2.4 million for the year, we would expect it to be substantially free cash flow positive in all four quarters.

Moving on to first quarter guidance, while we experienced increased CPMs in the seasonally strong fourth quarter, remember that the first quarter is always our seasonal softest. Because of this seasonality, we expect CPMs and overall revenues to step down as much as 35% from the record-highs in the fourth quarter, similar to what we experienced last year. As a result again before any contribution from the If(we) acquisition which is not expected to close this second quarter, we expect first quarter revenue to be in the range of $19.5 million to $20.5 million, which represents a range of 47% to 54% growth year-over-year.

We expect adjusted EBITDA to be in the range of $4 million to $5 million, which would represent a growth in the range of 8% to 35% year-over-year. Again there's no revenue contribution from If(we) built into our first quarter guidance. On another note please remember that we are spending for user acquisition the 20% of revenues compared to 16% a year ago and also as Geoff mentioned have been hiring ahead of the If(we) acquisition and those hires will impact the first quarter EBITDA.

In conclusion, the mobile advertising market remains strong and we believe it continues to grow with advertisers trying to reach the coveted millennial generation. As a public market leader for social discovery on a mobile device and with the prospect now of more than 10.5 million monthly active mobile users across the portfolio, we believe MeetMe is perfectly positioned to capitalize on the increase of dollars being spent on mobile advertising.

And with that, operator you can open the call for questions.

Question-and-Answer Session

Operator

And thank you. [Operator Instructions] And we will hear first from Darren Aftahi of Roth.

Darren Aftahi

Hey guys, thanks for taking my question and congrats on the acquisition. Just a couple if I may, first, so you said you spent 18% marketing in the fourth quarter and that number is going to go to 20% for fiscal 2017.

Geoff Cook

Yes. Yes, Darren.

Darren Aftahi

Great. Couple of questions on the acquisition. How fast is the user base growing and what is that split between in particular I guess mobile DAU between U.S. international. Second piece on the mobile advertising revenue side, did I hear it correct, you said $12.9 million out of the $44 million is related to mobile advertising. And then just last question, with all the commentary Geoff you said about the synergy, that I didn't quite catch all the metrics you mentioned something about 60% of CPMs and similar ad load to MeetMe, I think $12 million to $20 million in incremental mobile advertising. Maybe I am mischaracterizing your comments, but just trying to understand the rationale of $9 million in EBITDA of the $44 million and potentially kind of where that number could go, thanks.

Geoff Cook

Got it, got it. To answer this, the mobile app DAU question, they are experiencing a modest mobile app DAU growth. I think that there is real opportunity to improve that. I think one of the key metrics, we’ll be looking to converge is chats per DAU, there are some – I think fairly straightforward improvements, we could make to improve their chats per DAU and what we've seen on MeetMe was, but as we increased our chats per DAU from the 10 to 12 range and currently If(we) closer to 12, as we increased that to 25, we saw an increase in DAU to go along with it.

As it relates to kind of the of revenue, I mentioned that if we had a diversified revenue model, advertising virtual credits and subscriptions. The revenue comes from two platform groups, mobile app platforms and desktop mobile web platforms. The mobile app platform accounted for 36% of total revenue in Q4 2016, that’s the piece that we expect to continue to accelerate with the balance from desktop and mobile web.

I called out mobile app revenue, because experienced that significant growth and we see that continuing as we kind of layer in some of our best practices as we look at where they are kind of versus where we were at different stages of time, their ARPU and their ad loads, but especially their ARPU looked a lot like ours back in the 2013, 2014 timeframe.

So I think that there’s some pretty straightforward things we can undo to optimize the ad inventory in the near term. Related to their desktop and mobile web platform, that’s a much more mature business experiencing a transition to mobile. We’ve obviously ourselves managed a transition like that once before, and we’ve found as you know, our mobile users to monetize it quite a better rate, ultimately than our web users ever did. We believe that accelerated growth for mobile will more than offset the decline in desktop and mobile web, which we do expect from their business so that we expect their total topline to continue to grow modestly as that transition occurs as their mobile app advertising line grows much faster than that.

In terms of – I think there’s a lot of variables on conversions obviously, but I think as revenue grows we’re going to be able to – for one thing and invest more and more into marketing for their business.

Darren Aftahi

Great, thank you.

Operator

And we’ll go to our next question from Andrew Boone of JMP Securities.

Andrew Boone

Hi, guys, thanks for taking the question. So my first question is more of a big picture question. So two big acquisitions in the last year or so, can you guys just talk about your thesis on M&A and what does that look like going forward. Or you guys, kind of continue to be acquisitive once you guys kind of build back up the cash position or how should we think about that. And then secondly on international, you guys started monetizing that on MeetMe, can you guys just talk about kind of how that’s going, has there been any developments for Skout. What does that kind of look like. Thank you.

Geoff Cook

Sure. On your first question, are you going to continue to be acquisitive, I think we’re obviously focused predominantly on integration right now. We realize this is a big step for us and we are very much focused on that integration and keeping it smooth. That said, we believe and continue to believe that this space is highly fragmented and ripe for consolidation. And if we were to see attractive targets at creative valuations that align with what I think is a high bar as it relates to our business goals and the strategy, course we look to engage in deeper discussions to close deals like that.

As it relates to the question around monetizing international, I think we’ve been taking it very slowly, I think, for one thing we have yet to turn on and leave on the mobile native ad unit for internationally I think it’s something that, I think we’re still optimizing the ad engine in CPMs at least as it relates to MeetMe International, before we turn on that unit. So I think we’ve been taking it pretty slow on international.

David Clark

Now, that is embedded in the first quarter guidance, as the expectation that we’re going to move slowly and cautiously as it pertains to international advertising.

Andrew Boone

Is just the $5 million, you guys previously talked about, is that still on the table?

David Clark

In terms of the opportunity on the MeetMe legacy apps.

Andrew Boone

No, in terms of international.

David Clark

Yes, on the MeetMe legacy apps.

Andrew Boone

Yes. Sorry, yes.

Geoff Cook

On a run rate basis, I think it is – I think we’re going to continue to invest our team’s time and where we think the biggest dime for the buck is right now, we’re pretty focused on combining the user basis with seamless chat across Skout and MeetMe and are building out our video network. I think we continue to test different ads and this relates to advertising, Bill our Chief Revenue Officer is very focused on getting that mix to be right such that we feel the reward is kind of worth the engagement as it relates to international users.

Andrew Boone

Great. Thanks, guys.

Operator

And we’ll go to our next question from Mike Latimore of Northland Capital Markets.

Nick Altmann

Hey, guys this is Nick Altmann on for Mike. Thanks for taking my questions. Just sticking on the topic of international, including the acquisition what percent of revenue do you guys think will be international next year. And then if I guess, if you guys hit that target how much will EBITDA margins fall.

David Clark

So the question was international – what percentage of revenue we expected to be international this year.

Nick Altmann

Yes.

Geoff Cook

Well. I think where we’ve been looking at is roughly 41% and then I’m talking really to MeetMe and Skout, but roughly 41% of our DAU is U.S. and that’s been driving 80-plus percent of our revenue. I think David looking at the number but that’s directionally where it is. I don’t expect much to change post-Tagged, given that Tagged U.S. composition is around 40% as well. So my expectation is that will look pretty similar. We will look to continue to eke out additional impression growth internationally but I would broadly expect it to look similar to that.

Nick Altmann

Okay. Got it, and then just as a second question here. Can you guys just give us a little bit more color on how engagements been trending specifically how much time has been spent on the app and has that increase since the beginning of the integration with Skout?

Geoff Cook

So I think in Q4 we saw, Q4 MeetMe DAU as I mentioned to be roughly in line with where we were at Q3 MeetMe DAU. Skout saw DAU decline sequentially largely as a results, we believe of two things, one was – a block by the country of Indonesia which blocked a number of social apps and that block had since been restored although because Indonesia – it was a fairly sizable country to Skout, so it had a outside effect on DAU relatively little, so no effect on revenue just given the CPMs there.

Another piece was just ad load, I think ad load contributed to, we look to normalize the ad load between MeetMe and Skout and I think that has some effect. In terms of are we seeing an improvement as a result of seamless chat integration rollout. We were only at 1% rollout up until really last week; we just started to really kind of take the gloves off and increase it from there. And so I’d expect to know more in the coming weeks.

Nick Altmann

Got it. Thank you.

David Clark

Hey, Mike. I just – anticipated percentage of dollars from internationals about 20% in 2017’s the expectation.

Nick Altmann

Okay. Thanks.

Operator

[Operator Instructions] We’ll hear next from Blake Harper of Loop Capital. Please go ahead.

Blake Harper

Thanks. Hi Geoff, Hey David. Just wanted to ask you was there – are we able to determine if there was a significant or any amount of overlap of the user bases between Tagged and either Skout or MeetMe or you say that there were relatively or that was a different user base. And then I also want to clarify your comment about, did you say that you will look to integrate the user base of Tagged on an option basis?

Geoff Cook

Yes, so we did look at overlap, as we did look at overlap between Skout and MeetMe. We did look at overlap between Tagged and Skout and Tagged MeetMe. And it was less than 5% in both cases, this is largely not overlapping. As it relates to integration, are we going to do something similar to a seamless chat that we're in the process of rolling out between Skout and MeetMe and I think we're still working through the ideal way to integrate those two communities I don't want to – I think we want to see the benefit as a result of seamless chat. I think we also want to, I think further understand that If(we) user, the Tagged and the hi5 user more and make sure that we are combining, we're taking into account things like the demographics of each app.

Blake Harper

Got it, thanks. And then I just wanted to ask maybe David if you could maybe comment on where you expect beyond the mobile ARPDAU number to be in 2017 given the guidance that you have about now in the – towards your international user base than you previously have before.

David Clark

Let see if I can find that give me just a second. Hold on just digging it up, Blake. Okay at the high end of the guidance. Pardon me if taken so long. Like whatever reason I can't put my model here. Can I call you after the call and get back to you.

Blake Harper

Okay. That’d be great. Thanks.

Operator

And at this time, we’ll go to a follow-up question from Darren Aftahi of Roth.

Darren Aftahi

Hey, guys. Two things want to clarify. One I think Geoff you said, you need some – or you did some hires in anticipation of the If(we) acquisition. I'm just curious if we can kind of quantify what that was and then in better than your 1Q adjusted EBITDA guidance are there some any kind of abnormal costs related to the If(we) acquisition that kind of aren’t excluded in that number. I know that number was – the G&A number little bit higher in Q1 of 2016 so would you kind of – give us any clarity on that? Thanks.

David Clark

As general matter, Darren we add back and you see it in a reconciliation we add back costs associated with acquisitions similar to what we did in the fourth quarter because we have a lot of closing costs around the Skout acquisition that recognized in the fourth quarter. So $4 million to $5 million really represents higher marketing spend and then yes, Geoff mentioned the hires I could offline quantify for you in total from G&A perspective but we obviously are beating up both in the technology side as Geoff mentioned.

Geoff Cook

It’s no more than really there were few – it is also a transition of an outgoing CTO which is wrapped up in that as well.

David Clark

I’m sure, yes.

Darren Aftahi

Great. Thank you.

Geoff Cook

So at the high end of guidance to Blake’s question ARPDAU would be about $0.13.

Operator

And we will take next from Jeff Osher of Harvest Capital.

Jeff Osher

Hey guys, congrats on a good quarter and looks like a fantastic deal structure and acquisition?

Geoff Cook

Thanks.

Jeff Osher

Hi David, I mean you guys were really comprehensive with regard to the disclosure metrics. So I missed a couple of things. Did you say you had $20 million of cash on hand today?

David Clark

Today, yes.

Jeff Osher

Okay. So your receivable collections have been pretty strong quarter to-date?

David Clark

Yes, I mean – this – you are right, we go into the year end with our largest receivable balance and this is a good quarter from a collection standpoint. But generally you know with us in the advertising business collection – DSOs are usually in the 60 range because this is the way advertisers pay.

Jeff Osher

Good. Okay, and then with regard to D&A, was there anything with regard to purchase accounting in the $1.8 million in Q4, is that kind of a good run rate with the Skout, MeetMe combination on a go-forward basis?

Geoff Cook

Yes. That’s a good run rate, Jeff.

Jeff Osher

Good, good. Okay. Good, and then how do we think about the tax rate or what's embedded and I guess you didn't give us anything below the EBITDA line, but given where your NOLs are I assume there would be no statutory tax rate in 2017?

Geoff Cook

Yes. We would not anticipate there'd be any Jeff, we’ll pay some AMT, but right. I mean – I mean we’ll I have the new number in the K when it gets filed. I know in the third quarter of last year, our NOI was $60 million. So I mean its good year to about…

Jeff Osher

Yes, great. That’s fantastic. Okay and bear with me here for one or two more. The JPMorgan facility, do you know what the – or can you share what the interest rate will be on that $30 million?

Geoff Cook

Is that confidential for or not, it was filed already. So it's about its LIBOR two and five, eighth's on blended basis, there is a term portion and a revolver portion.

Jeff Osher

L plus two and five, eight.

Geoff Cook

Yes.

Jeff Osher

Good, good, fantastic. Okay. All right. So just taking…

Geoff Cook

I’m not sure, okay.

Jeff Osher

This is a great. I know this is great – this is very thoughtful. Okay. So talking Geoff’s prudently – prudent $9 million which really was that – it sounds like a trailing 12 month he's projecting forward. And just kind of walking through assume there will be some pickup in D&A adding another, let’s round up call it a $1 million of interest expense. Hey, congratulations on a really thoughtful deal structure for your equity holders and I'll jump back in the queue.

Geoff Cook

Okay. Thanks, Jeff.

David Clark

Thanks, Jeff.

Operator

[Operator Instructions]

Todd Kehrli

Jenny, if there's no more questions in the queue. I think we can probably wrap it up.

Operator

And there are no other questions in the queue at this time, sir. I will turn it back to you.

Todd Kehrli

Okay. Thank you, operator and thank you everyone for joining us today. We look forward to updating you on our progress on our next quarterly conference call. And this concludes today's call. Thank you.

Geoff Cook

Thanks.

Operator

And again, that does conclude our conference for today. We would like to thank everyone for their participation. And you may now disconnect.

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